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Just Right, Just-In-T ime
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and Never Too Much
At Green Gear Cycling, makers of the Bike Friday foldable travel bike, each bike is
built to order. Inventory is small and the company doesnt stock partial works-in-
progress.
From color to size, every bike is a custom project. As co-owner Alan Scholz says,
Were a flow company. Green Gear receives product daily and ships daily.
Every day we have stuff going in and stuff going out. 1
Just-in-time (or JIT) proponents describe this as the difference between push and
pull production systems. In JIT, customer orders trigger the production process
essentially pulling components and supplies down the line.
Within a just-in-time system, managers adopt the policy that it is best to have the
right materials at the right time in the right place and in the right amount.
Anything outside of this just right system is considered wasteful. The idea
is that having parts or goods simply waiting on shelves is not the best use of
company resources. Inventory ties up cash as well as space that could be used
for production. This inventory is also subject to theft, damage, or perhaps more
commonlyobsolescence.
1 Bike Friday Factory Tour Video - Part 4. The Gal From Down Under. 05 Mar. 2009
<http://www.galfromdownunder.com/movies/WEB-bf-factory-tour-part4.mov>.
2 Oregon Companies Keep Production Local. Bicycle Retailer and Industry News. 05 Mar. 2009
<http://www.bicycleretailer.com/news/newsDetail/2189.html>.
3 Stevens, Tim. Pedal Pushers. Industry Week 17 July 2000.
2009 4imprint, Inc. All rights reserved
Once you eliminate the risks and carrying costs of inventory, your
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organization can become more flexible and responsive. Gone are the
days of stalling a product enhancement or pushing product on a
client while you wait for inventory to draw down.
The JIT philosophy is that inventory should not act as a mechanism for
accommodating inefficiencies in other areas of the system. By optimizing the supply
chain, inventory (i.e. waste) is reduced.
Multiple opportunities for waste exist throughout the supply chain. A JIT initiative
endeavors to eliminate as many inconsistencies as possible including:
Raw Materials: e.g. variable quality, unreliable delivery
Manufacturing: e.g. unpredictable production, set-up
times, staff productivity
Distribution: e.g. inconsistent product requirements
Always better
At Green Gear, customization goes far beyond color choices. Customers submit their
height, weight, inseam measurements, age, and preferred riding position with every
order. The company builds bikes to accommodate everyone including children, little
people, and the very tall.
Standard delivery time is four weeks, although the company can accommodate last
minute ordersfor a premium.
4 Hyer, Nancy Lea. Reorganizing the factory competing through cellular manufacturing. Portland,
Or: Productivity P, 2002.
2009 4imprint, Inc. All rights reserved
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We can accommodate those kinds of requests, with decision-to-buy to riding in three
days, said Scholz. Most bike manufacturers have terrible margins and huge lead times.
They have no levers. We give people what they want, when they want it. If you do that,
people are willing to pay you for it. 5
With prices ranging from roughly $1000 to $1500 per bike, expediting fees not included,
Green Gear discovered early on that there were profits to be had in short lead times and
customization.
Well explain more as we outline the key components of a just-in-time system including
1) supply management, 2) employee empowerment, 3) production cells, 4) reduced setup,
5) signaling systems, and 6) takt time.
Implementing JIT
Just-in-time cannot be explained in a simple multi-step process. Consultants spend years
honing their knowledge of just-in-time best practices. And naturally, every company
presents unique challenges and opportunities. The following is a basic overview of
just-in-time concepts. To build on these ideas in your own company, seek professional
assistance or begin a more in-depth course of study.
1. Supply management
Logically, a just-in-time system requires small, frequent shipments. JIT systems work when
long-term relationships exist and suppliers are educated about your production process
and are informed as needs arise.
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company has built its niche as a just-in-time supplier, buying,
storing and reselling specialized materials to and from more
than 100 plants nationwide. Its services assist nuclear plants in
reducing inventory and becoming more cost-efficient.
When we can get the inventory out within a day or so, we have a big advantage over
our competitors, said Kay Fisher, vice president of Divesco. And, it really helps in
fostering the relationships we currently have with our customers; they know they can
rely on us.
Tightening the supply chain requires strong relationships at every stage along the
way. Often, JIT supply systems rely on vendor-managed inventory, whereby automated
tracking tools alert the vendor when materials are required.
When implementing JIT, a business eliminates its just in case inventory. That buffer
must be replaced by reliable vendors who can consistently deliver on-time, on-demand.
Toyota, the global model for just-in-time systems, famously ran into trouble in July
2007 when one of its suppliers was impacted by an earthquake. The carmaker had to
temporarily shut down 12 production facilities after Riken Corp., a supplier of $1.50
piston rings, was damaged by a quake. Nevertheless, company leaders remained firm in
support of the just-in-time policy. Weve been implementing this strategy for decades
... and well keep on with it, President Katsuaki Watanabe said. 6
2. Empowered employees
In a just-in-time system, employees must have the knowledge and the
freedom to make decisionsreacting to certain indicators or triggers
in the production cycle.
The JIT manager is more of a coach, rather than someone who doles
out tasks. He/she becomes a problem solver, removing obstacles and
bottlenecks that prevent streamlined production.
For employees, empowerment is optimized when they are cross-trained and job
6 Chozick, Amy. Toyota Sticks by Just in Time Strategy After Quake. Wall Street Journal [New York] 24 July 2007,
Eastern ed., sec. A: 2.
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productionthis builds in worker-flexibility and creates a production environment in
which team members can see what needs to get done and pitch in to do it.
3. Production cells
Just-in-time systems use small production cells. Cell operators are organized into
cross-trained teams and are responsible for building their components, from
start-to-finish, including quality control.
After an introduction to the cellular model, leadership changed its mind, determining
that production goals could be reached with far less investment. Under the new system,
Morgan Furniture cut turnaround from roughly three and a half weeks to an average of
just three days. 10
<http://www.irl.cri.nz/industry-sectors/high-tech-manufacturing/one-hundred-percent-more-la-z-boys.aspx>.
10 Ibid.
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able to increase production space another 40%. Accordingly, company leaders expected to
meet the increased production goal within a year. 11
Consider a NASCAR team that can change four tires and fill a tank of gas in 20 seconds.
The team has specialized equipment and processes in place to meet those outstanding turn
times, and similar opportunities are available in many manufacturing environments.
5. Signaling system
Signaling systems alert suppliers that it is time to deliver more material. In JIT circles, this
signal is often referred to a kanban. Kanban, a Japanese word for visual sign, harkens back
to the Toyota system.
A kanban triggers material delivery when you need it, and eliminates the need for
constant inventory management.
Imagine a company that manufactured scissors. Each scissors requires a pivot screw which is
delivered to the production cell in bins. Each station is outfitted with two bins that hold a
predetermined number of screws. When the operator empties one of those bins he/
she would take the card from the bottom and deposit in an order box. The card is a
signal, or kanban, to order more screws.
Some businesses use cards, others empty bins and some even use color-coded golf
11 Ibid.
6. Takt time
Takt or cycle time is the pace of production required to meet consumer demand. If takt
time is two hours, units should come out of the production cell at the rate of one every
two hours.
This takt or cycle time can be broken up by the number of tasks it takes to complete a
certain project. The minimum cycle time should be equal to the longest task time.
In times of low demand, a company may operate closer to maximum cycle time. But
when takt time must be reduced to meet demand, the manufacturer adds people to the
production cell. In order to flex with the ebb and flow of customer orders,
workers must be cross-trained and flexible in order to jump in and out of
various production rolesin exactly the same way Green Gear reduces takt
time with temporary workers and office help.
All of these procedures, from kanbans to production cells and takt time,
are part of a comprehensive just-in-time system. Nevertheless, most could
be introduced as a stand-alone improvement to the production process.
Moreover, just-in-time systems are not limited to the manufacturing floor. Cross-training,
kanbans, and project cells can be applied in many administrative settings.
JIT changes will touch all areas of the organization, so its essential that company leaders
express support and encourage buy-in. Likewise, JIT will require substantial changes to
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share their ideas and gear up for the new system.
The process requires careful evaluation of all production and inventory procedures.
In doing so, a company eliminates waste, improves customer service, and ultimately
increases the bottom line.
Just-in-time principles are closely aligned with lean manufacturing, another production
concept
that grew out of Toyota. Lean is an overarching philosophy which seeks to reduce waste
throughout the organization. While JIT is one of several tools used to achieve lean, it can be
implemented on its own.
Lean practitioners have a language of their own, and the definition or application of these
terms is often debated. Here are some common terms you might find associated with lean
practices and one accepted meaning for each:
5S A five-step method for creating clean, organized workspaces: sort, simplify, sweep,
standardize, and sustain.
Kaizen An event in which team members evaluate procedures or equipment and seek to
make improvements. Kaizen events are part of a continuous improvement process.
Kanban A visual sign or signal typically used to trigger an order for parts or materials.
TPS Stands for the Toyota Production System, considered a precursor to lean
and used somewhat synonymously by some.
Waste Any activities that consume resources but do not add value to the
product or service.